tv Nightly Business Report PBS September 15, 2011 7:00pm-7:30pm PDT
for thursday, september 15. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: captioning sponsored by wpbt >> susie: good evening everyone. central banks from all around the world came to the rescue of european banks today. in an unusual show of force, tom, they joined together to pump american dollars into the european banking system and to
reassure investors that there won't be a repeat of a global financial crisis. >> tom: susie, the move was symbolic. exactly three years ago today, lehman brothers, the legendary wall street firm, collapsed, sending shock waves throughout the financial markets. but today's action restored confidence and investors bought up stocks. the dow surged 186 points, the nasdaq added almost 35 and the s&p was up 20. trading volume about the same as yesterday-- 953 million shares on the big board and just below 2 billion shares on the nasdaq. >> susie: today's action by the five central banks may be aimed at pumping up investor confidence as much as shoring up europe's banks. the european central bank coordinated with the u.s. federal reserve, the bank of england, the bank of japan and the swiss national bank. they are promising to exchange u.s. dollars for other assets so european banks have enough dollars for the rest of the
year. some banks in europe have been having trouble getting u.s. dollars. key sources, like u.s. money market funds, have been drying up as financial firms worry about high debt levels held by european countries. why do european banks need a steady stream of u.s. currency? so they can make pay off past loans made in dollars and service the interest payments. the e.c.b.'s new lending program will begin next month. it will allow banks to borrow as many dollars as they want, at a fixed interest rate, for up to three months. the british, japanese and swiss national banks will do the same. the u.s. fed won't make direct loans, but it will offer funds to the e.c.b. it is hoped the loans will prevent a liquidity and confidence crisis. but economist robert brusca says the plan is not a solution to the eurozone's problems. >> europe has lots of issues. european banks still has lots of issues. and perhaps the biggest issue isn't being talked about, and is
why banks so unwilling to lend to other banks. and since banks know the problems are already in it, suggest to me that the problem is even worst than we've been led to believe. >> reporter: this is erika miller in new york. worries about europe have been weighing heavily on u.s. stock prices. the s&p 500 is down more than 10% from its april highs, but take a closer look, and you'll see a different story. s&p's alec young says weakness in a single group is weighing down the whole market. >> if you took out the financials, the market would be flat on the year, instead of down 6%. so, what's nice about that, it's kind of like a cancer-- the rest is healthy. it's a tale of two markets. there are financials and there's everything else. everything else looks pretty good. >> reporter: there's more reason to feel optimistic. earnings reporting season will start in early october and many on wall street think it will help lift stock prices. the s&p 500 is expected to post a 14% gain in the third quarter,
the eighth-straight double-digit gain. sure, wall street analysts have been trimming their forecasts. but strategist andrew goldberg says that's actually a good thing. >> as you have analysts ratcheting down expectations, and many of them are across the board, it makes it easier for earnings data to beat on the upside, and that could be a short-term catalyst. but make no mistake, in the long term markets are looking for clarity out of europe. >> reporter: in particular, investors want reassurance that germany and france are committed to backstopping greece. the other thing they want to see is proof the u.s. economy is not tipping back into recession. >> what we are watching for over the next couple of months, couple of quarters is the extent to which the data bears that. the data is not going to be great. it's not an economy that's going to grow gangbusters, but we don't see the economy as falling off a cliff. >> reporter: and neither do business leaders at two bellwether firms. the head of general electric, jeffrey immelt, and u.p.s. chief scott davis have both said a double dip is unlikely.
but just in case, some strategists recommend investors position their portfolios defensively. >> we think the best bet for your typical investor is to focus on high quality dividend- paying stocks in the utilities and consumer staples sectors while simultaneously avoiding financials. >> reporter: so although utilities and consumer staples may not be terribly exciting investments, safety may be more appealing to many investors these days. erika miller, "nightly business report," new york. >> tom: still ahead, from i.d. theft to being safe during a semester abroad, why insurance is important to life on a college campus. president obama has visited ohio and north carolina this week, hoping to put pressure on republicans to act on his jobs bill. today, washington got a very different version of how to create jobs. house speaker john boehner said the vision the president laid out is a poor substitute for the pro-growth economic ideas that republicans support.
darren gersh reports. >> reporter: if there was any doubt the president's jobs plan would have to be reworked to have a chance of passing, speaker john boehner removed it today. >> let's be honest with ourselves. the president's proposals are a poor substitute for the pro- growth policies that are needed to remove barriers to job creation in america-- the policies that are needed to put america back to work. >> reporter: high on the policy list for republicans is their campaign to rein in regulation they say is killing job creation. >> my worry is that for american job creators, all the uncertainty is turning to fear that this toxic environment for job creation is a permanent state. job creators in america are essentially on strike. the problem is not confusion about the policies, the problem is the policies. >> reporter: most economists consider regulation a long-run concern. better rules will make the
economy more efficient, but it won't create jobs now. >> we do need to focus on the regulatory burden and nail that down so that businesses have clarity, but we also need to address what's going to happen next year. i think if we could have some of all of the above, i think we'd be in better shape. >> reporter: the speaker also ruled out any tax increases as part of the deficit reduction effort congressional negotiators are struggling to reach. instead, boehner asked the so- called super-committee on deficit reduction to aim at a larger tax reform. but house democrats have deep concerns. >> you can't just say you're going to have reforms that are going to lower the corporate rate, which i would fully support, unless you have enough reform to reduce the deficit too. because if you don't, otherwise all of the reduction of deficit will have to come out of the cut side, and i just don't think that that's fair, nor part of the balance that the american people are seeking. >> reporter: given the deep divide that remains in washington, the betting is that whatever congress does on a jobs
package or deficit reduction, it is more likely to go small than go big. darren gersh, "nightly business report," washington. >> susie: the u.s. postal service announced today that it might close about half of its mail processing centers in the next two years. it's the agency's latest attempt to shore up a more than $8 billion budget shortfall. the plan could cut as many as 35,000 jobs and slash processing equipment in half. it could also lead to slower mail delivery. the changes come as mail volume has dropped 17% in the last five years. postmaster general patrick donahoe calls the proposal radical, but says it's necessary. >> we want the postal service to be profitable and to compete for customers and to drive economic growth. to do so, we must create a low- cost streamlined operational network. >> susie: those changes could save the agency as much as $3 billion. officials also want changes from congress that could help them cut even more expenses.
>> susie: one of the banking world's biggest titans is retiring-- john mack. he'll step down as chairman of morgan stanley at the end of the year. mack did two stints at morgan stanley, leaving in 2001 after a dispute with then chairman phil purcell, returning as c.e.o. in 2006 and becoming chairman early last year. his departure means current c.e.o. james gorman will add the
chairman's role to his duties. and tom, here at the new york stock exchange it was a happy day. i mean four days in a row with days up, they are actually calling it a winning streak. >> tom: certainly is it's been quite a week here. september is not living up to the reputation as a rally killer, certainly not yet at least. but still a few sessions to go. let's go ahead and take a look at tonight's market focus. u.s. stocks were encouraged by the news out of europe we mentioned at the top of the program to finish with gains for the fourth straight session, but a bellwether tech stock, the maker of the blackberry mobile device, research in motion, turned in a much-worse-than- expected quarter. the company earned 80 cents per share, eight cents less than estimates. the results are just over half of what they were one year ago. revenues also came in short of forecast, driving the disappointment.
the company shipped 10.6 million blackberry smartphones as it started selling devices with its new operating system, hoping to counter the competition from the iphone. it shipped 200,000 of its tablet computer, called the playbook. that's a drop of more than 50% versus what it shipped just a quarter before. these two devices are the bread and butter at research in motion, but both came in well short of expectations. ahead of these results, the stock had lost a fraction on heavier-than-usual volume. after falling to its 52-week low in early august, it had been trying to rebound from the sharp sell-off in june when it cut its financial guidance. but with tonight's disappoint, the stock was down 18% after the close, putting it around $24 dollars per share. financial stocks led the way during the regular session, with a mixed group. life insurer lincoln national
saw the best gains, up 8%. investment manager less mason jumped almost 6.5%. and the nasdaq exchange rallied almost 6%. bank of america was the biggest dow gainer, up 4%. this is the past 90 sessions. while it was among the most actively traded, volume was lighter than usual pace. b. of a. was among big credit card issuers to release new delinquency rate data. bank of america saw fewer customers pay their bills late, falling below 4%. j.p. morgan's deliquency rate also fell, to around 2.5%. j.p. morgan stock was up 3% today. but capital one saw its delinquency rate increase. some analysts expressed surprise that capital one's delinquency rate jumped as much as it did. the share price fell a fraction in an otherwise strong financial stock today. volume was heavier than average.
the health care sector was among the weakest of the gainers today, but hospital operator h.c.a. popped 12%. the company is buying back stock owned by bank of america. b. of a. had the shares from when h.c.a. was a private company, and then went public. b. of a. will make about $2 billion on its investment. h.c.a. gets to buy back the stock at a discount compared to its initial public offering price, but to explain today's stock pop in h.c.a., the deal will help increase the hospital's earnings per share. by decreasing the number of shares outstanding. meantime, health insurance stocks caught a bid. united health, aetna and wellpoint all saw gains. the centers for medicare and medicaid predicted higher enrolls next year in medicare plans run by private insurance groups. netflix says it won't deliver the kind of subscriber growth it had planned, cutting its customer rolls. it will have 800,000 fewer dvd subscribers at the end of this quarter and 200,000 fewer streaming video customers.
the net result is one million fewer subscribers. it has been a great growth story over the past several years. that sent shares plummetting, down 19%. this is its lowest price since november. the company has seen a negative reaction to its price hike announced this summer. finally, some profit-taking in commodities. natural gas fell 4% thanks to plenty of supply and record production. corn fell another 3%. and gold dropped 2.5%, below $1,800 an ounce. and that's tonight's "market focus." >> susie: british police have arrested a rogue trader who's being blamed for $2 billion in losses at swiss banking giant u.b.s. 31 year old kweku adoboli was working as the bank's director of exchage-traded funds in its london office. he's accused of fraud related to $2 billion in unauthorized trades. u.b.s. would not identify the man, but it said that no client positions were impacted.
u.b.s. shares plunged to their lowest level in two years-- down 10% to $11.40. >> tom: a bonanza for the i.r.s. thanks to tax cheats. the tax agency has netted almost $3 billion since launching a crackdown on offshore tax havens in 2009. the internal revenue service has also caught thousands of tax cheats, with nearly 30,000 coming forward in exchange for leniency. the agency's director says the effort has made a "serious dent in offshore tax evasion." some of the people found to be hiding assets have received jail time and have been ordered to pay millions of dollars. >> susie: bank of america's countrywide financial unit is in hot water with the department of labor for firing a whistleblower. the agency says the woman was fired after uncovering multiple instances of lending fraud at the mortgage giant's boston area branches. she also repeatedly warned both countrywide and bank of america executives of widespread fraud in subprime lending. the employee has been identified as eileen foster, a former
internal investigator at countrywide. bank of america has been ordered to give foster her job back and $930,000 dollars in back pay. >> tom: one in three american adults is obese. being very overweight brings with it significant health risks and significant costs, at a time when 50 million americans have no health insurance. a new study in the medical journal "lancet" finds patients who were told by their doctor to use weight watchers lost twice as much weight as those who just saw their doctor. we spoke with c.e.o. of weight watchers international david kirchhoff about what this study means for the way his company does business. >> weight loss isn't necessarily an easy thing to do and it's not an easy thing to sustain. but when the right behavior elements are in place, you can have success which is therefore the consumer part of our business which is, you know, hoping to inspire people and motivate them and give them a reasonable-- they can succeed l help give them that extra spark that helps them through the behavior
change process. the health care really is an entirely new way an very much a complimentary way of sort of helping people find the right approach to address the weight issue an kind of nudging them as well so it really becomes kind of a new channel, if you will. >> dave, i want to point out that weight watchers did pay for this study it was done in europe for full disclosure. what's the opportunity, the business opportunity for weight watchers here. >> one minor point on that, we funded the study by it was done out of the medical research council, was the lead out of cambridge university well. had zero input on study design, data analysis, editorial. >> point taken watch. about the business opportunity for weight watchers here? >> i think the business opportunity again is going to be going into the future, finding ways of partnering with doctors. and so therefore creating the business systems and partnerships and everything else to bring that to life is then becomes the part of the business change process that we start pursuing going forward. >> and dave as you are
pursuing that be, any highering plans, in the united states for the rest of the year. >> i'm very proud to say that we are hiring. we have been all this year. and we have been highering in two principal areas, one has been around supporting technology and our internet products, a very big part of our bit right now, weight watchers on-line, developing iphone, application, android i pad. we have been highering software folks. we've also been hiring people in the health care space to buildout that part of our business because it requires a whole new set of capabilities and i think the point is that we are hiring because we see growth opportunities which really if you look at it is the only reason that people actually hire. >> with that in mind, where are the growth opportunities. what is your view of the u.s. economy? >> terms of the economy itself, i mean there's not a lot to be incredibly positive about in terms of sort of a rapid resurgence of the american economy. you have these confounding issues of you know consumers are sort of confused and depressed and everything
else. and you can see that in consumer confidence numbers and frankly businesses aren't doing much better. so i believe what everybody else will tell you which is that the economy itself will limp around but we're going to continue to pursue growth opportunities like health care, like technology and frankly even in our core consumer proposition with our core support. >> dave, you are in an interesting intersection with consumers and health care. these are two big debates going on just down the road from where you are in washington on capitol hill. what would you like to see from policymakers in regards to kick starting economic growth? wince think the biggest thing without a doubt that policymakers can do to kick start economic growth is to once and for all resolve their issues that they have with each other. come up with a plan to address completely overcomplicated tax code. come up with a plan to address how to make entitlement programs like medicare and medicaid stronger and sustainable. same thing with social security and manage the deficit at the same time. and show a clear set of direction. i think what is really sort of bringing everything to
its knees is the uncertainty that we're seeing kind of across-the-board with no clear path forward. >> our guest here today from washington d.c., it's the c.e.o. of weight watchers international. dave kirchhoff. >> susie: here's what we're watching for tomorrow: candy maker is jelly belly is hanging a help wanted sign. we'll go to its job fair to see why the company is hiring now. also tomorrow, frank cochrane is our "market monitor" guest. he says we're in bear market 3.0, and this one will be long and nasty. the federal reserve bank of kansas city has named esther george to be its president and the region's voice on monetary policy. george has been the bank's first vice president and chief operating officer since 2009. she succeeds thomas hoenig, who turned 65 last week and has led the kansas city fed since 1991. his retirement, october 1, is mandatory under the fed's age restrictions. >> tom: united technologies' sikorsky helicopter unit will
eliminate about 3% of its worldwide workforce. that's about 540 people. the company began notifying workers in connecticut and poland of the planned layoffs today. sikorsky did not say how many of the job cuts would come in the united states. the company, which makes both civilian and black hawk military helicopters, faces weakening demand as washington looks to cut its military budget.
>> susie: in tonight's "kids and cash," teaching your college-age kids the ins and outs of insurance. here's christie alderman, vice president of new products and services at chubb personal insurance. >> as your kids start or go back to college, consider-- no matter if your child's dorm is filled with target or versace-- talking about the risks and insurance with your coed can be a teachable moment. help kids get their own insurance policies, and build insurance history that could lead to lower rates in the future. teach students facing frequent i.d. fraud from their credit card solicitations to protect their information. aim to resolve fraud when it happens. insurance and credit card companies may offer free resolution services to clear up fraud; know in advance who to contact so you can contain the
damage. if your child scores a semester abroad somewhere exotic like madagascar, or a seemingly safe spot like london or japan, plan ahead to ensure you have accident and health insurance. this insurance reimburses you for the costs-- which can be several hundred thousands of dollars-- to, for example, airlift an injured hiker off a mountain or coordinate emergency responders in the rainforest. organizing emergency evacuation, finding quality medical care and even translation services can be covered. anticipating emergencies can turn a disastrous detour in their semester into a mere bump in the road. i'm christie alderman. >> tom: speaking of insurance, allstate says hurricane irene turned out to be a lot less costly than the tornadoes that struck the south and midwest this spring. in total, allstate says irene's damages resulted in a $500 million loss for the company. in april and may, the company lost $2 billion because of severe thunderstorms and tornadoes. industry estimates for total
privately ensured losses on irene are running just below $2 billion. >> susie: you can keep up with n.b.r. anytime. we're online at n.b.r. on pbs.org. there, you'll find all the market data from the program, and you can watch any programs you may have missed. you can also follow us on twitter, @bizrpt, or my personal feed, @sgharibnbr. we're also on facebook at bizrpt. finally, we asked our facebook friends which is the biggest worry: the u.s. or european economy. here's what you had to say. david is more worried about the u.s. economy, including the effects problems in europe might have on it. lori says first it will be the european economy. then we are next. you can do more than voice your opinion on our facebook page, you can also watch clips from our program and read excerpts from robert drach's market commentary. that's "nightly business report" for thursday, september 15. i'm susie gharib. good night everyone, and good
night to you too, tom. >> tom: good night susie. i'm tom hudson. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org